US consumers to ‘dump fixed-lines’

Fixed-line telecom companies are facing a "potentially staggering" threat to their consumer business from wireless operators.

New research from telecoms solutions provider CIT-PriMetrica suggests that nearly 50 per cent of US households would be prepared to switch from a wireline service to a family share wireless option with 600 shared base minutes offered at $50 per month.

The survey, which was carried out in conjunction with Ernst & Young, also found that around one third of US households would drop their wireline service for a similar wireless package with 2000 shared based minutes costing $130 per month.

Unsurprisingly, homes that already have a wireless service are more willing to replace their fixed-line facility than those that do not have any wireless service.

According to CIT-PriMetrica, these findings suggest that the threat posed by wireless service to wireline telephone companies is "potentially staggering." "One of the most pressing threats to the incumbent telcos is the widespread use of wireless and the aggressive marketing plans of various wireless companies," said the company in a statement.

This is not good news for a sector that is already struggling under massive debt and stagnant revenues.

CIT-PriMetrica found, for instance, that growth in the number of wireline users in the US has more or less stalled. From 2000 to 2001, total lines grew from 263 million to 272 million and were flat in 2002. "With a difficult economic environment, declining prices and increased competition via alternatives, the long established telecos are suffering with poor results," said CIT-PriMetrica.

It is the competition from wireless providers though that may prove the most debilitating for fixed-line telecoms. The rise in mobile phone usage, coupled with the emergence of new wireless technologies such as Wi-Fi, is seeing more and more people ditch their fixed line service for a more convenient and 'on the go' substitute.

A recent study in the UK, for instance, found that 17 percent of mobile phone users frequently send SMS when at home rather than pick up the phone.

According to Paul Eddings, managing director of CIT-PriMetrica in the UK, the greater availability of wireless technologies that can also provide services such as high-speed Internet connections will be a major threat to telecos in Europe.

"Up to now, a lack of knowledge, inertia and concerns about connectivity have held people back from switching from wireline to wireless. But these problems are being overcome by wireless providers and is it quickly getting to the stage where households no longer need a fixed-line service," said Eddings.

He also told ElectricNews.Net that he expected the trend emerging in the US to be replicated in Europe over the next couple of years. © ENN